Archives of “April 3, 2019” day

rss

Human error in trading: Fat fingers here to stay

  
Analysis, Education
I expect that many of us can recount times when we have entered wrong orders into the market. Perhaps when you enter a buy order, but you meant to sell. Maybe you accidentally put a zero on the end of you lot size and only realised later? Well, the phrase ‘fat finger’ is simply a colloquial way of saying, someone has made a mistake. It is said to be a fat finger. In many ways I quite like the phrase as it depersonalises what can be a very embarrassing and costly mistake. Saying a ‘fat finger’ is to blame is much better than saying , oh it was Mr Joe Bloggs who works for BNP Paribas, yes, he is the man who brought a stock to it’s knees overnight. He was thinking about the Man U vs PSG  coming up you see and just switched off for a second.
Some of the moves cause by ‘fat fingers’ can be large. In April 2018 Deutsche Bank AG accidentally transferee 28 billion euros to an outside account as part of its daily derivative dealings. Ouch. One of outhitting Korea’s target brokerages was trying to pay their employees 88 cents per share in dividends in April 2018. However, instead it gave them 1000 shares instead. That totalled about $105 billion, which was thirty times more than the company was worth. The kicker came when 16 employees sold their stock and this created a huge fall in the share price. They must have thought it was their lucky day.
Now, in many cases these errors can be reversed. However, it is hard to eradicate these types of human errors. Germany’s chief financial regulator noted in March that the majority of computer security problems were caused, not by cybercriminals, but by human ‘mishaps or mistakes’. See here for a gated link.
So, with lots of transactions on a daily basis, fat fingers are here to stay..

Eurostoxx futures +0.7% in early European trading

  
Analysis, Global Indices

The positive vibes spill over to Europe in early trades

  • German DAX futures +0.8%
  • French CAC 40 futures +0.7%
  • UK FTSE futures +0.1%
Only UK stocks are seeing gains tempered with a little as the pound gains some ground overnight following Theresa May’s offer to compromise with the Labour party in order to achieve a Brexit resolution.
Other than that, overall risk sentiment remains more buoyant and that should keep the aussie and kiwi underpinned against the likes of the dollar and yen as we begin the session

Nikkei 225 closes higher by 0.97% at 21,713.21

  
Analysis, Global Indices

Tokyo’s main index gains as risk-on mood sweeps across markets

Nikkei 03-04

Equities are trading in an upbeat manner as trade optimism and data beats from China earlier today are helping to contribute to the improvement in risk sentiment today. US equity futures are also up by about 0.4% and bond yields are generally higher as well.

The mood as we begin the European morning sees the yen on the back foot as a result with the likes of the aussie and kiwi leading gains in the major currencies space.

Fitch Ratings says has a negative sector outlook on Chinese banks

  
  Analysis

Fitch concerned that slow profit growth at China’s banks to pressure capitalisation

  • Has a negative sector outlook on Chinese banks
  • Expects net profit growth for Chinese banks to be in single digits in medium term
  • Believes explicit intervention from chinese authorities over bank lending may impact governance and risk management practice
  • Says Chinese state banks may receive more guidance from authorities, whether explicit or implicit, in their lending in general
  • Chinese banks may not be appropriately compensated for additional risks that they are taking on

Not a ringing endorsement from Fitch on China, add in bad debt issues that haven’t gone away and releveraging efforts to boost growth … not a pleasant cocktail. Issues for down the road though I suppose, for now the economic data is bouncing and China-proxy trades (and risk more generally) are liking it.

ADB warn developing Asia could slow for a second straight year in 2019

  
Analysis, Economy

Asian Development Bank latest with specific concerns on economic risks from China – US trade tension and potentially disorderly Brexit.

Developing Asia (45 countries in the Asia-Pacific region) expected to grow 5.7% in 2019
from projected 5.9 %in 2018 & 6.2% in 2017
2020 forecast 5.6%, slowest since 2001
Both Bloomberg and Reuters have run downs on the ADB’s Asian Development Outlook report if you’d like more.
Note this:
  • Exchange rate volatility can be problematic, particularly for nations that rely on dollar debt. 
We’ve seen this already.

Nasdaq leads the stocks into the close

  
Analysis, US Market

Nasdaq up 0.33%. S&P up 0.7%. Dow still down.

The major stock indices are trading mixed today as the market moves to the US close.
  • The Nasdaq is leading the way with a gain fo 24.7 points or 0.31% at 7853.
  • The S&P is near unchanged levels at +2.11 points or 0.08% at 2869.50.
  • The Dow is the laggard as it is being hurt by sharp declines in Walgreens (down -13.14%).  The index is down -58 points or -0.22% at 26199
Some winners today:
  • Delta Air, +6.23%
  • Facebook, +3.3%
  • United Continental, +2.23%
  • Apple, +1.65%
  • AMD, +1.24%
  • Twitter, +1.20%
  • Bank of America, +0.98%
  • Cisco, +0.70%
  • Micron, +0.69%
Some losers today:
  • Walgreens, -13.14%
  • Verizon, -1.0%
  • Nike, -0.96%
  • Tesla, -0.93%
  • Wells Fargo, -0.87%
  • Broadcom, -0.79%
  • Home Depot, -0.56%
  • American Express, -0.51%
  • Stryker, -0.47%
  • Walt Disney, -0.31%
  • Emerson, 10.24%
  • Adobe, -0.12%
Go to top